S&P 500 weakness is starting to accelerate in line with the broader “risk-off” tone. Below 4373, the index can see a price top established for a test of the 63-day average at 4315, the Credit Suisse analyst team reports.
See: S&P 500 Index to decline 10% and end the year at the 4000 level – Morgan Stanley
A close below 4425 this Friday would see a bearish “reversal week” established
“With daily and weekly RSI momentum divergences in place and a bearish ‘reversal week’ threatening (seen confirmed on a close below 4225 on Friday) bearish pressures look to be increasing. Further reflecting this remains see the broader ‘risk-off’ moves emerging in EM equity markets and China as well as now strength in the USD and weakness in commodities.”
“We continue to look for further weakness with key price support seen at the August lows at 4381/73. Below here can see a top complete to further increase bearish pressure to expose the 63-day average, currently at 4315.”
“Resistance is seen at 4418 initially, with 4424/26 ideally capping to keep the immediate risk lower. We shall though maintain an immediate tactical bearish bias whilst below 4462.”
“The VIX has not unsurprisingly surged higher for a close above its 200-day average and above 25.09 would see a base complete to warn of a further rise to test the May high at 28.93.”